Related to the Economics in Practice on p. 156: According to the "paradox of thrift," increased efforts to save will cause a(n)
A) increase in income and an increase in overall saving.
B) increase in income but no overall change in saving.
C) decrease in income and an overall decrease in saving.
D) decrease in income but an increase in saving.

Question

Quizplus · Accepted Answer

The paradox of thrift states that when individuals try to save more, they end up spending less, resulting in a decrease in overall demand and a decrease in income. This decrease in income leads to a decrease in overall saving, even though individual saving may have increased. Therefore, the correct answer is (C) decrease in income and an overall decrease in saving.

Related to the Economics in Practice on P